7 ways the sexes handle credit differently

Gender does bend spending and borrowing behavior, studies say

Think
men and women whip out their credit cards for different reasons? What about
debt repayment ---- are there behavior variances between the sexes? As with
height, we are more alike than not. Still, as with those remaining couple of
inches where males are just slightly taller, there are a few fascinating
differentials among the genders regarding credit.

1.
Charging habitsOn the
whole, men and women carry roughly the same load of consumer debt. However, a
disparity begins to emerge when some men start seeking a partner. According to
the 2008 findings reported in the academic journal Evolutionary Psychology,
"males who are relatively higher in mating effort may have a greater tendency
to maximize their display of economic power, saving little and even spending
beyond their capacity through the use of credit." In other words, the
desire to attract a member of the opposite sex can influence a man to lay down
the plastic a little more frequently than perhaps is best for his own financial
health.

And what
about business owners -- do male and female entrepreneurs use credit in the
same way to finance their company's needs? Not really, according to a 2002 study by Federal Reserve economists Alicia Robb
and John Wolken. They found that
women business owners were significantly more prone to borrow using credit
cards than their male counterparts. Male-owned firms, on the other hand, used trade
credit -- buying supplies and services from another business with "pay later"
agreements -- and paid after the due date with greater frequency than
female-owned firms.

2.
Number and type of credit accountsInterestingly,
men are more apt to have car loans, mortgages and other types of installment
accounts, while women hold a greater number of bank cards and use them more
frequently, reported a 2006 study on the subject by Experian's Score Index. The report also indicated that women had somewhat more credit inquiries
than men.

Why the
discrepancy with the amount of credit cards? Many times it's a practical issue
-- when men and women couple up, it's often the woman who has greater reign
over the family's household finances and therefore makes more purchasing
choices. In short, a woman may need and use credit simply because she's out
shopping more often.

3.
Paying for medical careGender differences in credit behavior emerge even at the doctor's office and hospital. A
2008 survey conducted by The Guardian Life Insurance Company of America revealed that men are far more likely than women to charge major
medical recovery expenses. According to the study, one out of five Americans
who had direct experience with a critical illness used a credit card to pay for
their recovery related expenses. However, it also found that males are
twice as likely as females to have done so: 30 percent of men charged critical
illness recovery expenses as opposed to just 14 percent of women. Although
financing such medical care is an option, it is usually better to request an
interest-free payment plan with the hospital or physician. They can only
say no, and frequently say yes.

4. Credit card offersIn CreditCards.com's
June 2008 "Taking Charge" survey, a
significant difference between the sexes became apparent regarding how credit
card offers received in the mail are disposed of. The results showed that women
are considerably more likely than men to shred their credit card offers (55
percent versus 43 percent), while men are more likely to throw them in the
garbage (34 percent versus 25 percent). The results don't surprise financial
planners and credit counselors, who say it mirrors what they see among their
clients: Women tend to be more conservative and men less cautious. Dvorkin explains
the different approaches as women more conscious of "doing the right
thing" with the credit card offers, while "the guy is just going to
rip it up and hope nobody goes through the garbage can."

5.
Help: Who gets it and whenBoth sexes
get into their fair share of credit trouble, but when it comes to reaching out
for help when balances swell, it's most often women who seek assistance.
"Guys tend to have more debt bravado than their female counterparts and tend
to put off getting help with their debt," says Ken
Clark, a Little Rock, Ark., financial planner and psychotherapist who
specializes in helping partners see eye-to-eye on financial matters. He's
found that women greatly favor counseling whereas men
try to keep it private and get second jobs to resolve it on their own.

Clark also
notes that men tend to be less aware of their account details -- from their
cards' APRs to even what their payment is. "In general," Clark says,
"women are a bit more detail oriented. They'll be the first to make a
budget, especially when they are anxious about their balances."

6. Credit communicationWhether
assets or liabilities, many couples aren't always forthright about what they
have or how much they owe. Regarding credit card activity, though, Dvorkin
finds women to be generally more open and expressive. A woman will talk about
her financial issues more readily and openly, while a man is more apt to hold
back information and, asserts Dvorkin, "stick his head in the ground like
an ostrich" once trouble begins to brew.

7.
BankruptcyWhen debt
problems reach the point of no place left to turn, women are more likely than
men to take the legal route out. The U.S. Department of Justice Trustees Office
reports that among those who file for Chapter 7 bankruptcy, credit card debt is
higher for males in debt than females by a few thousand dollars. This
higher debt load before pulling the bankruptcy trigger support Dvorkin's assertion that, "Men only file if
they have to, in an emergency, while women look it as is as a solution sooner
in the process."

Ultimately,
the two genders share most of the same credit habits, both good and bad. Yet
there are differences as well, and acknowledging them can help in mutual
understanding. If you're in a relationship with someone of the opposite sex,
talk about opposing approaches to consumer borrowing issues, including the best
use of credit and what to do if problems surface. It's time to lay your cards
on the table.

Published: February 4, 2009

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